Opinion
Civil No. 02-4924 (DWF/JSM)
August 11, 2003
John J. Curi, Esq., Curi Law Office, Minneapolis, Minnesota, counsel for Plaintiff.
David L. Hashmall, Esq., Felhaber Larson Fenlon Vogt, Minneapolis, Minnesota, counsel for Defendants.
MEMORANDUM OPINION AND ORDER
Introduction
The above-entitled matter is before the undersigned United States District Judge pursuant to the parties' cross-motions for summary judgment. For the reasons set forth below, Defendants' motion is denied; Plaintiff's motion is granted.
Background
This case raises the issue of whether an employee who is fired for accessing unrestricted files in a shared computer drive can be considered to have been terminated for "Cause" and accordingly denied severance pay benefits. Plaintiff Nancy J. Johnson brought this action against Defendants U.S. Bancorp Broad-Based Change in Control Severance Pay Program and Severance Administration Committee (collectively, "U.S. Bancorp" or the "Bank") to challenge the Bank's denial of her request for severance pay benefits. Johnson was employed by U.S. Bancorp for approximately 23 years, and at the time the events leading to this lawsuit arose, acted as Manager of Financial Systems Support. Prior to the occurrence of the events that resulted in this lawsuit, Johnson was rated "highly effective" in her performance evaluations and recognized as an "outstanding" employee.
1. The Severance Plan
While Johnson was employed at U.S. Bancorp, the Bank was involved in a merger with Firstar Corporation. As a result of the uncertainty arising from this merger, the Bank offered certain employees a severance plan so that these employees, who could potentially be terminated if a change in control occurred, would be encouraged to remain at the Bank. See Change in Control Severance Pay Program Summary Plan Description ("SPD") and U.S. Bancorp Comprehensive Welfare Benefit Plan/Broad-Based Change in Control Severance Pay Program ("Severance Plan"). Johnson accepted the Bank's offer of the Severance Plan and thus worked at the Bank under the terms of the Severance Plan.
Under the Severance Plan, an employee could lose eligibility for severance pay if the employee was terminated for cause, among other things. ( See SPD at 3, 4.) "Cause" was defined by the SPD as "termination for continued . . . failure to substantially perform your duties; misconduct (including violation of U.S. Bancorp rules or policies); or conviction of a crime." ( Id. at 3.) The Severance Plan defined "Cause" as "gross and willful misconduct during the course of employment . . . including, but not limited to . . . acts or omissions which violate the Employer's rules or policies (such as breaches of confidentiality), or other conduct which demonstrates a willful or reckless disregard of the interest of the Employer. . . ." (Severance Plan at A5-1, 2, § 1.7.)
U.S. Bancorp was given sole discretion to determine whether "Cause" for termination existed. (Severance Plan at A5-2.) In addition, the Severance Plan provided as follows:
7.1 Determinations. The Benefits Committee and any person to whom such authority has been delegated pursuant to Section 6 hereof, shall interpret and administer the terms and conditions of the Plan, decide all questions concerning the eligibility of any persons to participate in the Plan, grant or deny benefits under the Plan, construe any ambiguous provision of the Plan, correct any defect, supply any omission, or reconcile any inconsistency as the Benefits Committee or its delegatee, in its discretion, may determine.
( Id. at 12, § 7.1.) Under the terms of the Severance Plan, a qualified employee who was terminated for reasons other than "Cause," within 24 months of a change in control, would be eligible for up to 24 months of his or her base compensation as severance pay. (SPD at 8.)
2. Johnson's Termination
Johnson, along with many of her coworkers, enjoyed access to shared computer drives in order to perform her job duties. On approximately March 29, 2002, Johnson accessed a shared drive and viewed several files that belonged to other people, but were kept on the shared drive. Specifically, Johnson accessed information placed on the shared drive by Kathy Ashcraft, one of Johnson's senior managers, including Ashcraft's wedding invitation, a wedding guest list, and directions to the wedding. In addition, Johnson accessed a file in Ashcraft's shared drive folder entitled "2002 Performance Goals," that contained performance information about other employees and discussion of future organizational changes. The path to that file was: \\INCFIN01\vol2:\Shared\CAP\KathyAshcraft\personnel. No special password was required to access files in Ashcraft's "personnel" folder; indeed, access to the files was not restricted whatsoever. In addition, no evidence has been presented that Johnson used the information or disclosed it to another person.
Apparently, an unidentified manager at the Bank was later made aware that the personnel information had been accessed, as rumors were circulating concerning information that was contained in the accessed file. The Bank conducted an investigation and determined that several employees, including Johnson, had accessed files in Ashcraft's "personnel" folder on the shared drive. When questioned by the Bank's Human Resources representative, Johnson admitted that she had no business reason for accessing and viewing the files in question. Ultimately, in April 2002, the Bank terminated Johnson and three other employees for accessing these files.
The Bank claimed that the information that Johnson had accessed was confidential and that she viewed the information in violation of company policy. The "Notice of Termination" that Johnson was sent stated that Johnson "[would] not receive severance pay because [her] employment [was] being terminated for cause." See Complaint, Ex. 1. Further, the Notice of Termination stated that Johnson was being terminated because she "engaged in unethical conduct by violating U.S. Bancorp Code of Conduct." Id.
Shortly after Johnson was terminated, Johnson applied for severance pay benefits under the Severance Plan. Johnson's request was denied. In the letter explaining the Severance Committee's denial of benefits, the Bank's Severance Committee gave three reasons for its determination that Johnson was terminated "for Cause." The Severance Committee stated as follows:
First, her conduct violated the "Computer and Information Security" policy which provides that "all of your computer access is on a need-to-know basis and is limited to information required to perform your job." Ms. Johnson admitted that she did not have a business purpose to access the files she accessed.
Second, Ms. Johnson's conduct in accessing other employees' performance information violated U.S. Bancorp's confidentiality and proprietary information policies in the Code of Ethics and Conduct on the Job. These policies provide: "The use of any information stemming from your employment shall be restricted to that which is absolutely necessary for the legitimate and proper business purposes of U.S. Bancorp . . . Also, information about how we run our business (such as . . . our people . . .) . . . must be treated with utmost discretion . . . employee information [is] to be treated as highly confidential in all cases. This information may not be . . . used for any purpose other than performance of job duties for U.S. Bancorp. . . ."
Third, Ms. Johnson's conduct violated U.S. Bancorp's policy in its Code of Ethics and Conduct on the Job regarding integrity. That policy requires that employees treat all company resources with the respect befitting a valuable assert [sic] and provides that such resources should never be used in ways that could be interpreted as imprudent or improper. Accessing another employee's confidential files demonstrated a lack of integrity and constituted an improper use of company resources.
The Committee determined that Ms. Johnson's conduct was gross and willful misconduct that not only violated the above policies, but also demonstrated a willful or reckless disregard of U.S. Bancorp's interest.
For the above reasons, the Committee concluded in its sole discretion that Ms. Johnson is not entitled to severance benefits under the Plan because her termination was for Cause.
( See Aff. of David L. Hashmall, Ex. B at 2.)
On appeal, the Severance Committee affirmed the denial of severance benefits on October 29, 2002. ( See Aff. of David L. Hashmall, Ex. C.) As a result, Johnson brought this lawsuit challenging the denial of benefits pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA").
U.S. Bancorp brought its Motion for Summary Judgment asserting that its decision to deny Johnson's severance benefits was reasonable and supported by substantial evidence, and thus, the decision does not represent an abuse of discretion. In her Motion for Summary Judgment, Johnson first asserts that U.S. Bancorp's denial of benefits is entitled to a heightened standard of review. However, Johnson contends that under any standard of review, U.S. Bancorp's benefit determination was inappropriate.
Discussion
1. Standard of Review
Summary judgment is proper if there are no disputed issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The court must view the evidence and the inferences that may be reasonably drawn from the evidence in the light most favorable to the nonmoving party. Enter. Bank v. Magna Bank of Missouri, 92 F.3d 743, 747 (8th Cir. 1996). However, as the Supreme Court has stated, "[s]ummary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed 'to secure the just, speedy, and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986) (quoting Fed.R.Civ.P. 1).
The moving party bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Enter. Bank, 92 F.3d at 747. The nonmoving party must demonstrate the existence of specific facts in the record which create a genuine issue for trial. Krenik v. County of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995). A party opposing a properly supported motion for summary judgment may not rest upon mere allegations or denials, but must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Krenik, 47 F.3d at 957.
2. ERISA
A participant in an ERISA plan may bring suit "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). Typically, a court reviews a denial of benefits challenged under § 1132(a)(1)(B) under a de novo standard of review. Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). However, when a plan gives discretionary authority to the plan administrator or reviewing committee to determine eligibility for benefits or to construe the terms of the plan, the court reviews the decision to deny benefits for an abuse of discretion. Firestone Tire Rubber, 489 U.S. at 115. Here, the plan gives the U.S. Bancorp benefits administrator full discretion to "interpret and administer the terms and conditions of the Plan, decide all questions concerning the eligibility of any persons to participate in the Plan, [and] grant or deny benefits under the Plan. . . ." Severance Plan at 12, § 7.1. This language is sufficient to trigger the "abuse of discretion" standard of review.
Johnson urges the Court to apply a less deferential standard of review pursuant to Woo v. Deluxe Corp., 144 F.3d 1157, 1160 (8th Cir. 1998). The Court need not reach the issue of whether Woo applies, because the Court finds that under an abuse of discretion standard, the Bank's decision to deny benefits was not reasonable.
Under the abuse of discretion standard, the Court looks to whether a "'reasonable person could have reached a similar decision, given the evidence before him, not that a reasonable person would have reached that decision." Ferrari v. Teachers Ins. Annuity Ass'n, 278 F.3d 801, 807 (8th Cir. 2002) (quoting Cash v. Wal-Mart Group Health Plan, 107 F.3d 637, 641 (8th Cir. 1997) (emphasis in original)). Reasonableness is evaluated as to "'whether the decision is supported by substantial evidence which is more than a scintilla, but less than a preponderance.'" Id. at 807, quoting Woo, 144 F.3d at 1162. The Court considers "only the evidence that was before the plan administrator when the decision was made" and does not substitute its own weighing of the evidence for that of the administrator. Id. at 807.
In applying the abuse of discretion standard, the Court finds that, as a matter of law, a reasonable person could not have found that the Bank had "Cause" to terminate Johnson. Although the Court is not willing to accept Johnson's argument that it was part of her job duties to access the information in Ashcraft's "personnel" folder, the Court is also not willing to accept U.S. Bancorp's assertion that Bank Policy specifically prohibited her access. First, U.S. Bancorp had absolutely no safeguards in place to prevent Johnson from viewing the so-called "confidential" information. While the Bank has consistently asserted, in its briefing and at oral argument, that this information was very sensitive, the Court finds it difficult to believe that such sensitive information was kept on a shared computer drive with no security in place to prevent access to the files.
Second, U.S. Bancorp had no policy in place that specifically prohibited Johnson's viewing of these materials. U.S. Bancorp's reliance upon several vague provisions from its employee Code of Ethics and Conduct on the Job is misplaced. The Code states that an employee should not access data that she is "not authorized to access." However, Johnson was authorized to access the files-nothing prevented her access whatsoever. In addition, the Code discusses an employee's access to "confidential" information. Because the files were not designated "confidential" or protected from unauthorized disclosure in any way, the Court is not persuaded that Johnson's access resulted in gross and willful misconduct. Johnson may have been nosy, and her common sense should have prevented her access, but this does not rise to the level of "Cause" under the terms of the Severance Plan.
In summary, the information on the shared drives was not protected. The policies in place at U.S. Bancorp did not preclude Johnson from accessing the information in Ashcraft's personnel file. Contrary to U.S. Bancorp's assertions, Johnson did not violate an employee policy by accessing the information. Johnson was not terminated for "Cause." As a matter of law, U.S. Bancorp abused its discretion when it made its determination to deny benefits to Johnson. Thus, Johnson is entitled to severance pay benefits under the terms of the Severance Plan.
For the reasons stated, IT IS HEREBY ORDERED:
1. Defendants' Motion for Summary Judgment (Doc. No. 14) is DENIED.
2. Plaintiff's Motion for Summary Judgment (Doc. No. 8) is GRANTED.